S.I. No. 383/2009 - European Communities (Payment Services) Regulations 2009

S.I. No. 383 of 2009

EUROPEAN COMMUNITIES (PAYMENT SERVICES) REGULATIONS 2009

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 29th September, 2009.

I, BRIAN LENIHAN, Minister for Finance, in exercise of the powers conferred on me by section 3 (as amended by section 2 of the European Communities Act 2007 (No. 18 of 2007)) of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC ¹ , hereby make the following Regulations:

Part 1 Preliminary

1.

2.

3.

4.

5.

6.

7.

Part 2 Payment Service Providers

Chapter 1 Right to Provide Payment Services

8.

9.

Chapter 2 Authorisation of Payment Institutions

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

Chapter 3 Conditions of Authorisation

22.

23.

24.

25.

26.

27.

28.

29.Establishment of branch in the State by payment institution authorised in another Member State.

33.Obligation to give notice of intention to commence providing payment services in another Member State.

Chapter 4 Withdrawal of authorisation

Chapter 5 Small Payment Institutions

35.Small payment institutions — waiver of application of certain provisions of Chapter 2.

Part 3 Payment Systems

Part 4 Transparency of Conditions and Information Requirements for Payment Services

Chapter 1 General Rules

Chapter 2 Single Payment Transactions

Chapter 3 Framework Contracts

60.Information requirements for low-value payment instruments and electronic money.

Chapter 4 Common Provisions

Part 5 Rights and Obligations in Relation to the Provision and Use of Payment Services

Chapter 1 Common Provisions

67.Right of payment service provider and user to agree on application of certain provisions of these Regulations.

Chapter 2 Authorisation of Payment Transactions

71.Obligations of the payment service provider in relation to payment instruments.

72.Rectification of unauthorised, etc., payment transactions dependent on notice.

73.Evidence on authentication and execution of payment transactions.

74.Payment service provider’s liability for unauthorised payment transactions.

75.Payer’s liability for certain unauthorised payment transactions.

77.Requests for refunds for payment transactions initiated by or through a payee.

Chapter 3 Execution of payment transactions

Chapter 4 Data Protection

Part 6 Powers and Duties of the Bank

Chapter 1 Supervisory Powers and Duties

Chapter 2 Powers of Authorised Officers

Chapter 3 Out-of-Court Complaint and Redress Procedures

Chapter 4 Appeals

Part 7 Offences

111.Offence — provision of false or misleading information under Regulation 96(1)(a).

114.Offences — directors and others of bodies corporate and unincorporated bodies.

Part 8 Transitional

116.Payment service providers active before 25 December 2007 included in consolidated supervision of another undertaking.

117.Certain small payment service providers active before commencement of these Regulations.

Part 9 Amendment and Revocation of Other Legislation

119.Amendment of the European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992.

120.Revocation of European Communities (Cross-Border Credit Transfers) Regulations 1999.

121.Amendment of European Communities (Protection of Consumers in Respect of Contracts Made by Means of Distance Communication) Regulations 2001.

122.Amendments of European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004.

SCHEDULE 1 Payment Services

SCHEDULE 2 Amendment of other Legislation

Part 1 Amendments of Central Bank Act 1942

Part 2 Amendments of European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992

Part 1 Preliminary

Citation.

Commencement.

• (2) The remainder of these Regulations come into operation on 1 November 2009.

Interpretation.

“the Bank” means the Central Bank and Financial Services Authority of Ireland;

“competent authority”, in relation to any other Member State means the body or bodies charged by law in the Member State with the supervision of payment institutions;

“court” means the High Court;

“electronic money” has the same meaning as in the European Communities (Electronic Money) Regulations 2002 (S.I. No. 221 of 2002);

“Member State” means a Member State of the European Communities and includes a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992 ² (as adjusted by the Protocol signed at Brussels on 17 March 1993 ³ ), as amended from time to time;

“micro enterprise” has the meaning given by Commission Recommendation 2003/361/EC of 6 May 2003 ⁴ concerning the definition of micro, small and medium-sized enterprises;

“money-laundering” means:

• (a) the conversion or transfer of property, knowing that the property is derived from criminal activity or from an act of participation in criminal activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of the activity to evade the legal consequences of his or her action;

• (b) the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that the property is derived from criminal activity or from an act of participation in criminal activity;

• (c) the acquisition, possession or use of property, knowing, at the time of receipt, that the property was derived from criminal activity or from an act of participation in criminal activity, or;

• (d) participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions mentioned in the subparagraphs (a) to (c),

even if the activities that generated the property were carried out outside the State;

“payment account” means an account held in the name of one or more payment service users that is used for the execution of payment transactions where the holder of the account is entitled to place, transfer or withdraw funds without any restrictions;

“payment service”, subject to paragraph (2), means each business activity listed in Schedule 1;

“Payment Services Directive” means Directive 2007/64/EC of the EuropeanParliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC1;

“the Register” means the Register maintained by the Bank under Regulation 9;

“registered” means entered in the Register;

“terrorist financing” means the provision or collection of funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out any of the offences mentioned or referred to in Articles 1 to 4 of Council Framework Decision 2002/475/JHA of 13 June 2002 on combating terrorism ⁵ .

• (2) In these Regulations (other than in the definition in paragraph (1) and in Regulation 5) a reference to a payment service is a reference to a payment service to which these Regulations apply.

• (3) Unless the contrary intention appears, a word or expression used in these Regulations and also in the Payment Services Directive has in these Regulations the same meaning as it has in that Directive.

Bank to be competent authority.

• (2) Paragraph (1) does not imply that the Bank is required to supervise any business activity of a payment institution other than the provision of payment services and the activities mentioned in Regulation 27(1)(a).

Application of certain provisions of these Regulations.

• (a) one payment service provider involved is in the State, and

• (b) any other payment service provider involved is in the State or another Member State.

Payment transactions, etc., to which these Regulations do not apply.

• (a) payment transactions made exclusively in cash directly by the payer to the payee,

• (b) payment transactions from a payer to a payee through a commercial agent authorised to negotiate or conclude the sale or purchase of goods or services on behalf of the payer or the payee,

• (c) the business of physical transport (including collection, processing and delivery) of banknotes and coins,

• (d) non-professional cash collection and delivery within the framework of a non-profit or charitable activity,

• (e) the provision of cash back at the point of sale (that is, the service of providing, on request by a payer just before the execution of a payment transaction, cash to the payer by a payee as part of a payment transaction in connection with the purchase of goods or services),

• (f) money exchange business (that is, cash-to-cash operations, where the funds concerned are not held on a payment account),

• (g) payment transactions based on any of the following kinds of document drawn on a payment service provider with a view to placing funds at the disposal of a payee:

• (i) paper cheques in accordance with the Geneva Convention of 19 March 1931 providing a uniform law for cheques;

• (ii) paper cheques similar to those referred to in sub-subparagraph (i) governed by the laws of Member States not party to that Convention, including paper cheques within the scope of the Bills of Exchange Act 1882 (45 & 46 Vict. c.61);

• (iii) paper-based drafts in accordance with the Geneva Convention of 7 June 1930 providing a uniform law for bills of exchange and promissory notes;

• (iv) paper-based drafts similar to those referred to in sub-subparagraph (iii) governed by the laws of Member States not party to that Convention;

• (v) paper-based vouchers;

• (vi) paper-based traveller’s cheques;

• (vii) paper-based postal money orders (as defined by the Universal Postal Union),

• (h) payment transactions carried out within a payment or securities settlement system between settlement agents, central counterparties, clearing houses or central banks and other participants in the system, and payment service providers,

• (i) payment transactions related to securities asset servicing, including dividends, income or other distributions, or redemption or sale, carried out by persons referred to in subparagraph (h) or by investment firms, credit institutions, collective investment undertakings or asset management companies providing investment services and any other entities allowed to have the custody of financial instruments,

• (j) services provided by technical service providers that support the provision of payment services without them at any time entering into possession of the funds to be transferred (including processing and storage of data, trust and privacy protection services, data and entity authentication, the provision of information technology, communications networks, and the provision and maintenance of terminals and devices used for payment services),

• (k) services based on instruments that can be used to acquire goods or services only in the premises used by the issuer or under a commercial agreement with the issuer either within a limited network of service providers or for a limited range of goods or services,

• (l) payment transactions executed by means of a telecommunication, digital or IT device, where the goods or services purchased are delivered to and are to be used through a telecommunication, digital or IT device, on the condition that the telecommunication, digital or IT operator does not act only as an intermediary between the payment service user and the supplier of the goods and services,

• (m) payment transactions carried out between payment service providers, their agents or branches for their own account,

• (n) payment transactions between a parent undertaking and its subsidiary or between subsidiaries of the same parent undertaking, without any intermediary intervention by a payment service provider other than an undertaking belonging to the same group, or

• (o) the provision of a cash withdrawal facility by means of automated teller machines, where the provider—

• (i) acts on behalf of one or more card issuers,

• (ii) is not party to any framework contract with a person who withdraws cash, and

• (iii) does not conduct other payment services.

Relationship with Consumer Credit Act 1995.

Part 2 Payment Service Providers

Chapter 1 Right to Provide Payment Services

Persons that may provide payment services.

• (a) a credit institution within the meaning of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (including a branch, within the meaning of Article 4(3) of that Directive, located in a Member State of a credit institution having its head office in or, in accordance with Article 38 of that Directive, elsewhere than in a Member State),

• (b) an electronic money institution (within the meaning of the European Communities (Electronic Money) Regulations 2002 (S.I. No. 221 of 2002)),

• (c) An Post in its capacity as a provider of banking and giro services, or the postal authority of another Member State in its capacity as the provider of a giro service,

• (d) the Bank, the European Central Bank, or the central bank of another Member State, that is not acting in its capacity as a monetary authority,

• (e) a Member State, or a regional or local authority of a Member State, that is not acting in its capacity as a public authority,

• (f) a credit union (within the meaning of the Credit Union Act 1997 (No. 15 of 1997)),

• (g) a payment institution authorised under Chapter 2 or by Regulation 115 whose authorisation has not been revoked,

• (h) a person that has been registered after qualifying as a small payment institution under Regulation 35,

• (i) a person for the time being permitted under Part 8 to provide the payment service, or

• (j) a payment institution authorised as such in another Member State pursuant to a law giving effect to the Payment Services Directive.

• (2) A payment institution referred to in paragraph (1)(j) shall not provide, in the State, a payment service unless the Bank has been given notice in accordance with Article 25 of the Payment Services Directive.

• (3) A payment institution authorised under Chapter 2 or Regulation 115 to provide a payment service shall not provide, in the State or in another Member State, a payment service that is not covered by its authorisation.

• (4) A payment institution authorised by the law of another Member State to provide a payment service shall not provide, in the State, a payment service that is not covered by its authorisation.

• (5) A person referred to in paragraph (1)(h) shall not provide a payment service other than one it is registered to provide.

• (6) A person referred to in paragraph (1)(i) shall not provide a payment service other than one it is permitted under Part 8 to provide.

The Register.

• (a) payment institutions and their agents and branches,

• (b) credit unions, and

• (c) persons who have been registered after qualifying as a small payment institution under Regulation 35, and their agents and branches.

• (2) The Register shall specify the payment services for which a payment institution is authorised or for which a person referred to in paragraph (1)(c) has been registered.

• (3) Payment institutions, credit unions and persons referred to in paragraph (1)(c) shall be listed in the Register separately.

• (4) The Bank shall make the Register publicly available for consultation and accessible online, and shall keep the Register up to date.

Chapter 2 Authorisation of Payment Institutions

Applications for authorisation.

• (a) a programme of operations, setting out in particular the type of payment services envisaged,

• (b) a business plan including a forecast budget calculation for the first three financial years that demonstrates that the applicant is able to employ the appropriate and proportionate systems, resources and procedures to operate soundly,

• (c) evidence that the applicant holds initial capital in accordance with Regulation 11,

• (d) in the case of an applicant to which Regulation 24(2) applies, a description of the measures taken, in accordance with Regulation 24, for protecting payment service users’ funds,

• (e) a description of the applicant’s governance arrangements and internal control mechanisms (including its administrative, risk-management and accounting procedures) that demonstrates that those governance arrangements, control mechanisms and procedures are proportionate, appropriate, sound and adequate,

• (f) a description of the internal control mechanisms that the applicant has established to comply with its obligations in relation to money-laundering and terrorist financing and its obligations under Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds,

• (g) a description of the applicant’s structural organisation, including, if applicable, a description of the intended use of agents and branches and a description of any outsourcing arrangements, and of its participation in a national or international payment system,

• (h) the name of each person holding in the applicant, directly or indirectly, a qualifying holding (within the meaning of Regulation 3 of the European Communities (Markets in Financial Instruments) Regulations 2007 (S.I. No. 60 of 2007), the size of each such holding, and evidence of each such person’s suitability taking into account the need to ensure the sound and prudent management of a payment institution,

• (i) the name of each director or other person responsible for the management of the applicant and, where relevant, each person responsible for the management of the proposed payment services activities of the applicant, and evidence that each such person is of good repute and possesses appropriate knowledge and experience to perform payment services as determined by the home Member State of the payment institution,

• (j) the name of the person who will carry out for the applicant the functions of audit required by the Companies Acts,

• (k) the applicant’s legal status and memorandum and articles of association or other constitutional documents, and

• (l) the address of the applicant’s head office.

• (2) The applicant shall provide a description of its audit arrangements and the organisational arrangements it has set up with a view to taking all reasonable steps to protect the interests of its users and to ensure continuity and reliability in the performance of payment services.

• (3) The Bank may request from an applicant, by notice in writing, any further information that it requires for the purposes of considering the application.

• (4) If the Bank makes a request for further information under paragraph (3), the Bank is not obliged to consider the application until the applicant concerned provides the information so requested.

Initial capital.

• (a) where the applicant proposes to provide only the payment service listed in point 6 of Schedule 1, €20,000,

• (b) where the applicant proposes to provide the payment service listed in point 7 of Schedule 1, €50,000, and

• (c) where the applicant proposes to provide a payment service listed in any one or more of points 1 to 5 of Schedule 1, €125,000.

• (2) For the purposes of calculating an applicant’s initial capital, only the elements of its own funds described in subparagraphs (a) and (b) of Regulation 3(1) of the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006 (S.I. No. 661 of 2006) shall be taken into account.

Own funds.

• (a) the higher of—

• (i) the amount required by virtue of Regulation 11 as its initial capital, and

• (ii) the amount calculated by whichever of Methods A, B and C the Bank directs the institution, under Regulation 13(1), to use, or

• (b) if the Bank so permits under paragraph (3), the amount required by virtue of Regulation 11 as the applicant’s initial capital.

• (2) Methods A, B and C are set out in Regulations 14, 15 and 16 respectively.

• (3) The Bank may permit an applicant, on a case by case basis, not to hold own funds in accordance with paragraph (1)(a) if the payment institution is included in the consolidated supervision of a parent credit institution and meets the following conditions:

• (a) there is no current or foreseen material practical or legal impediment to the prompt transfer of own funds or repayment of liabilities by the parent credit institution;

• (b) either the parent credit institution satisfies the Bank regarding the prudent management of the payment institution and has declared, with the consent of the Bank, that it guarantees the commitments entered into by the payment institution, or the risks in the payment institution are of negligible interest;

• (c) the risk-evaluation, measurement and control procedures of the parent credit institution cover the payment institution;

• (d) the parent credit institution holds more than 50% of the voting rights attaching to shares in the capital of the payment institution, or has the right to appoint or remove a majority of the members of the management body of the payment institution.

• (4) On the basis of an evaluation of the risk-management processes, risk-loss database and internal control mechanisms of a payment institution, the Bank may require an applicant to hold an amount of own funds that is up to 20% higher than, or permit it to hold an amount of own funds that is up to 20% lower than, the amount that results from the application of the method directed by the Bank under Regulation 13(1).

Calculation of amount of own funds.

• (2) Regardless of the method that an applicant is to use in calculating own funds, in doing so, the applicant may take into account only components referred to in Regulations 3 and 9 of the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006 (S.I. No. 661 of 2006), subject to Regulations 7 and 8 and the limits set out in Regulation 11, of those Regulations.

• (3) Regardless of the method that an applicant is to use in calculating own funds, in doing so—

• (a) where the applicant belongs to the same group as another payment institution, credit institution, investment firm, asset management company or insurance undertaking, the applicant shall not take into account elements that also form part of a calculation of own funds for another member of the group, and

• (b) where the applicant carries out activities other than providing payment services, it shall not, in calculating own funds, take into account elements that are properly attributable to any of those other activities.

Calculation of own funds — Method A.

Calculation of own funds — Method B.

SE k

where—

• (a) SE is—

• (i) for PV up to €5 million, 4.0% of PV,

• (ii) for PV between €5 million and €10 million, €200,000 plus 2.5% of (PV — €5 million),

• (iii) for PV between €10 million and €100 million, €325,000 plus 1% of (PV — €10 million),

• (iv) for PV between €100 million and €250 million, €1,225,000 plus 0.5% of (PV — €100 million), and

• (v) for PV over €250 million, €1,975,000 plus 0.25% of (PV — €250 million),

(where PV is one-twelfth of the total amount of payment transactions executed by the applicant in the previous year), and

• (b) k has the meaning given by Regulation 17.

• (2) For the purpose of calculating SE for an applicant, a step in any of sub-subparagraphs (i) to (iv) in paragraph (1)(a) includes its upper limit but not its lower limit.

Calculation of own funds — Method C.

• (a) the amount calculated by the formula—

MF k,

or

• (b) 80% of the annual average of own funds (calculated using Method C) over the previous 3 financial years.

• (2) In paragraph (1)—

• (a) MF is the sum of—

• (i) 10% of the tranche of RI up to €2.5 million,

• (ii) if RI exceeds €2.5 million, 8% of the tranche of RI between €2.5 million and €5 million,

• (iii) if RI exceeds €5 million, 6% of the tranche of RI between €5 million and €25 million,

• (iv) if RI exceeds €25 million, 3% of the tranche of RI between €25 million and €50 million, and

• (v) if RI exceeds €50 million, 1.5% of the tranche of RI over €50 million,

where RI is the sum of the following:

• (vi) the interest income of the applicant concerned;

• (vii) its interest expenses;

• (viii) commissions and fees it receives;

• (ix) its other operating income,

and

• (b) k has the meaning given by Regulation 17.

• (3) For the purposes of a calculation using method C—

• (a) in calculating RI—

• (i) each element mentioned in the definition of RI in paragraph (2)(a) shall be included with its proper positive or negative sign,

• (ii) income from extraordinary or irregular items may not be used,

• (iii) expenditure on the outsourcing of services rendered by third parties may be used to reduce RI if the expenditure is incurred from an undertaking subject to supervision under these Regulations or the law of another Member State giving effect to the Payment Services Directive,

• (iv) RI is to be calculated over the previous financial year on the basis of the twelve-monthly observation at the end of the previous financial year, and

• (v) if audited figures are not available, business estimates may be used, and

• (b) a step in any of sub-subparagraphs (i) to (iv) in paragraph (2)(a) includes its upper limit but not its lower limit.

Calculation of own funds — scaling factor k.

• (a) in the case of an applicant that provides only the payment service listed in point 6 of Schedule 1, 0.5,

• (b) in the case of an applicant that provides the payment service listed in point 7 of Schedule 1, 0.8, and

• (c) in the case of an applicant that provides a payment service listed in any one or more of points 1 to 5 of Schedule 1, 1.

Decision to grant or refuse authorisation.

• (a) grant an authorisation to operate as a payment institution,

• (b) refuse to grant such an authorisation, or

• (c) grant such an authorisation subject to a specified condition or requirement.

• (2) If the Bank proposes to refuse to grant authorisation as a payment institution, it shall give the applicant concerned written notice of its intention to refuse, setting out a statement of the reasons for the proposed refusal and specifying a period (not less than 21 calendar days) within which the applicant may make written submissions in relation to the proposed refusal.

• (3) If the Bank proposes to grant authorisation as a payment institution subject to a specified condition or requirement, it shall give the applicant concerned written notice of its intention to do so, setting out a statement of the reasons for the proposed condition or requirement and specifying a period (not less than 21 calendar days) within which the applicant may make written submissions in relation to the proposed condition or requirement.

• (4) In making its decision on an application referred to in paragraph (2) or (3), the Bank shall take into account any submissions made by the applicant.

Conditions for granting of authorisation.

• (2) The Bank shall grant an authorisation if the information and evidence accompanying the application complies with all the requirements of Regulation 10 and if the Bank’s overall assessment, having scrutinised the application, is favourable. Before granting an authorisation, the Bank may consult other relevant public authorities.

• (3) The Bank shall grant an authorisation only if, taking into account the need to ensure the sound and prudent management of a payment institution, the payment institution has robust governance arrangements for its payment services business, including—

• (a) a clear organisational structure with well-defined, transparent and consistent lines of responsibility,

• (b) effective procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and

• (c) adequate internal control mechanisms, including sound administrative and accounting procedures.

Those arrangements, procedures and mechanisms shall be comprehensive and proportionate to the nature, scale and complexity of the payment services provided by the payment institution.

• (4) Where a payment institution provides any payment service and is also engaged in other business activities, the Bank may require the payment institution to establish a separate entity for the payment services business if the non-payment services activities of the payment institution impair or are likely to impair either the financial soundness of the payment institution or the ability of the Bank to monitor the payment institution’s compliance with its obligations under these Regulations.

• (5) The Bank shall refuse to grant an authorisation if, taking into account the need to ensure the sound and prudent management of a payment institution, it is not satisfied as to the suitability of any shareholder or member that has a qualifying holding.

• (6) Where close links exist between a payment institution and another person, the Bank shall grant an authorisation only if those links do not prevent the effective exercise of its supervisory functions.

• (7) The Bank shall grant an authorisation only if the laws, regulations or administrative provisions of a third country that govern a person with whom the payment institution has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, do not prevent the effective exercise of its supervisory functions.

• (8) For the purposes of paragraphs (6) and (7) “close links” exist between two or more persons if—

• (a) they are linked by—

• (i) participation in ownership, direct or by way of control, of 20% or more of the voting rights or capital of an undertaking, or

• (ii) a control relationship (that is, the relationship between a parent undertaking and a subsidiary, or a similar relationship between a person and an undertaking), or

• (b) they are permanently linked to the same third person by a control relationship.

Bank may require adjustments to applicant’s business plan.

Communication of the decision.

Chapter 3 Conditions of Authorisation

Requirements of this Chapter to be conditions of authorisation.

Maintenance of own funds.

• (a) the higher of—

• (i) the amount required by virtue of Regulation 11 as its initial capital, or

• (ii) the amount calculated by whichever of Methods A, B and C the Bank permits the institution, under paragraph (2), to use, or

• (b) in the case of a payment institution that the Bank permits, under paragraph (5), not to make a calculation by any of methods A, B or C, the amount required by virtue of Regulation 11 as its initial capital.

• (2) Subject to paragraph (5), the Bank shall direct a payment institution in writing to employ Method A, Method B or Method C to calculate the amount of own funds that the payment institution must hold.

• (3) The Bank may—

• (a) direct a payment institution under paragraph (2) to employ a method of calculation other than the method it directed a payment institution to employ for the purposes of its application for authorisation, and

• (b) direct a payment institution under paragraph (2) to employ a method of calculation other than the method specified in such a direction previously given.

• (4) Methods A, B and C are set out in Regulations 14, 15 and 16 respectively. For the purposes of calculating the own funds of a payment institution, a reference in Regulation 14, 15 or 16 to an applicant is to be read as a reference to the payment institution concerned.

• (5) The Bank may permit a payment institution, on a case by case basis, not to make any calculation by Method A, B or C if the payment institution is included in the consolidated supervision of a parent credit institution and meets the following conditions:

• (a) there is no current or foreseen material practical or legal impediment to the prompt transfer of own funds or repayment of liabilities by the parent credit institution;

• (b) either the parent credit institution satisfies the Bank regarding the prudent management of the payment institution and has declared, with the consent of the Bank, that it guarantees the commitments entered into by the payment institution, or the risks in the payment institution are of negligible interest;

• (c) the risk-evaluation, measurement and control procedures of the parent credit institution cover the payment institution;

• (d) the parent credit institution holds more than 50% of the voting rights attaching to shares in the capital of the payment institution, or has the right to appoint or remove a majority of the members of the management body of the payment institution.

• (6) For the purposes of calculating the amount of own funds that a payment institution is required to hold, references in Regulations 13 to 17 to an applicant are to be read as references to the payment institution concerned.

• (7) Where a payment institution is required to calculate own funds by means of Method C, it shall not allow its own funds to fall below 80% of the average of the own funds calculated using that Method over the previous 3 years.

• (8) On the basis of an evaluation of the risk-management processes, risk-loss database and internal control mechanisms of a payment institution, the Bank may require the payment institution to hold an amount of own funds that is up to 20% higher than, or permit it to hold an amount of own funds that is up to 20% lower than, the amount that results from the application of the method directed by the Bank under paragraph (2).

Safeguarding of users’ funds.

• (2) A payment institution that is engaged in a business activity referred to in Regulation 27(1)(c) shall safeguard users’ funds in either of the following ways:

• (a) users’ funds—

• (i) shall not be mixed at any time with the funds of any person other than the payment service users on whose behalf the funds are held, and

• (ii) if still held by the payment institution and not yet delivered to the payee or transferred to another payment service provider by the end of the business day after the day of receipt, shall be deposited in a separate account in a credit institution or invested in assets accepted by the Bank as secure, liquid and low-risk;

• (b) users’ funds shall be insured by an insurance company, or guaranteed by a credit institution, that does not belong to the same group as the payment institution, payable in the event that the payment institution is unable to meet its financial obligations, for an amount equal to that which would have been segregated if the method set out in subparagraph (a) had been used.

• (3) No liquidator, receiver, administrator, examiner or creditor of a payment institution, nor the Official Assignee in Bankruptcy, has any recourse or right against users’ funds held in accordance with paragraph (2)(a)(ii) received from payment service users or through another payment service provider for the execution of payment transactions until all proper claims of payment service users or of their heirs, successors or assigns against users’ funds relating to such payment transactions have been satisfied in full.

• (4) Where a payment institution that is required to safeguard users’ funds receives funds from a payment service user and part of those funds is to be used for future payment transactions and the remainder for non-payment services, the payment institution shall protect the part of the funds to be used for future payment transactions in accordance with paragraph (2). Where that part is variable or not known in advance, the payment institution may safeguard a representative part likely to be used for payment services if such a representative part can be reasonably estimated on the basis of historical data to the satisfaction of the Bank.

• (5) The Bank may require a payment institution that is not engaged in other business activities referred to in Regulation 27(1)(c) to comply with the requirements of paragraph (2).

• (6) The Bank may limit the application to a payment institution of a requirement under this Regulation to users’ funds of payment service users each of whom has deposited more than €600 with the institution.

Maintenance of authorisation.

Accounting and audit.

• (2) The obligations of an auditor of the holder of a licence under section 47 of the Central Bank Act 1989 (No. 16 of 1989) shall be taken to apply to the auditor of a payment institution. For that application—

• (a) references in that section to the holder of a licence shall be taken to be references to a payment institution,

• (b) a reference in that section to depositors shall be taken to be a reference to payment service users, and

• (c) references in that section to the Central Bank Acts 1942 to 1989 shall be taken to be references to these Regulations.

Activities in which a payment institution may engage.

• (a) the provision of operational and closely related ancillary services such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and the storage and processing of data;

• (b) the operation of payment systems;

• (c) business activities other than the provision of payment services.

• (2) When a payment institution engages in the provision of one or more payment services, it may hold only payment accounts used exclusively for payment transactions. The receipt of funds by a payment institution from a payment service user with a view to the provision of a payment service does not constitute—

• (a) the taking of a deposit or other repayable funds, or

• (b) electronic money.

• (3) A payment institution may grant credit related to a payment service referred to in point 4, 5 or 7 of Schedule 1 only if the following conditions are met:

• (a) the credit shall be ancillary and granted exclusively in connection with the execution of a payment transaction;

• (b) notwithstanding any law in relation to providing credit by means of credit cards, the credit shall be repaid within a short period that is not to be longer than twelve months;

• (c) credit shall not be granted from funds received or held for the purpose of executing a payment transaction;

• (d) the own funds of the payment institution shall at all times and to the satisfaction of the Bank be appropriate in view of the overall amount of credit granted.

• (4) A payment institution shall not engage in the business of taking deposits or other repayable funds.

Use of agents.

• (a) the name and address of the agent;

• (b) a description of the internal control mechanisms that will be used by the agent to comply with the payment institution’s obligations in relation to money laundering and terrorist financing;

• (c) the names of directors and persons responsible for the management of the agent, and

• (d) evidence that they are fit and proper persons.

• (2) When the Bank receives the information required by paragraph (1) it may list the agent in the Register.

• (3) Before listing the agent in the Register, the Bank may, if it considers that the information provided to it is incorrect, take action to verify the information.

• (4) If, after taking action to verify the information, the Bank is not satisfied that the information provided to it pursuant to paragraph (1) is correct, it may refuse to list the agent in the Register.

• (5) If a payment institution wishes to provide payment services in another Member State by engaging an agent, before the Bank registers the agent, the Bank shall inform the competent authorities of the host Member State of its intention to register the agent and shall take their opinion into account.

• (6) A payment institution shall ensure that any agent acting on its behalf informs payment service users that it is acting on behalf of the payment institution.

Establishment of branch in the State by payment institution authorised in another Member State.

• (a) money laundering or terrorist financing is taking place, has taken place or has been attempted, or

• (b) the engagement of the agent or establishment of the branch could increase the risk of money laundering or terrorist financing,

it shall so inform the competent authorities of the payment institution’s home Member State.

• (2) If a payment institution authorised in the State wishes to engage an agent or establish a branch in another Member State, and the competent authorities of that Member State inform the Bank that those competent authorities have reasonable grounds to suspect that, in connection with the intended engagement of the agent or establishment of the branch—

• (a) money laundering or terrorist financing is taking place, has taken place or has been attempted, or

• (b) the engagement of the agent or establishment of the branch could increase the risk of money laundering or terrorist financing,

the Bank may refuse to register the agent or branch.

Outsourcing of functions.

• (a) the continuing compliance of the payment institution concerned with the requirements of its authorisation or its other obligations under these Regulations,

• (b) its financial performance, or

• (c) the soundness or continuity of its payment services.

• (2) If a payment institution intends to outsource an operational function of the provision of payment services, it shall notify the Bank in writing accordingly at least 30 days before the outsourcing is to commence.

• (3) The Bank may direct a payment institution not to outsource an important operational function if the Bank is of the opinion that the outsourcing would:

• (a) result in the delegation by senior management of its responsibility;

• (b) alter the relationship and obligations of the payment institution towards its payment service users under these Regulations;

• (c) undermine the conditions with which the payment institution is to comply in order to be authorised and remain so;

• (d) remove or modify any other condition of the payment institution’s authorisation;

• (e) materially impair the quality of the payment institution’s internal control, or

• (f) materially impair the ability of the Bank to monitor the payment institution’s compliance with its obligations under these Regulations.

Liability.

• (2) A payment institution remains fully liable for any acts of its employees, or any agent, branch or entity to which activities are outsourced.

Record-keeping.

Obligation to give notice of intention to commence providing payment services in another Member State.

• (2) Within one month of receiving the notification referred to in paragraph (1), the Bank shall inform the competent authorities of the host Member State of—

• (a) the name and address of the payment institution,

• (b) the names of the individuals to be responsible for the management of the branch,

• (c) its organisational structure, and

• (d) the kind of payment services it intends to provide in the host Member State.

• (3) The Bank shall cooperate with the competent authorities of the host Member State.

• (4) The Bank shall notify the competent authorities of the host Member State whenever it intends to carry out an on-site inspection in the territory of the latter. However, if it so wishes, the Bank may delegate to the competent authorities of the host Member State the task of carrying out on-site inspections of the institution concerned.

• (5) The Bank shall provide the competent authorities of the host Member State with all essential and relevant information, in particular information about infringements or suspected infringements by an agent, a branch or an entity to which activities are outsourced. The Bank shall communicate all relevant information upon request, and all essential information on its own initiative.

• (6) Paragraphs (1) to (4) do not affect any obligation of the Bank to supervise or monitor a payment institution’s compliance with the requirements of any law in relation to money-laundering or terrorist financing.

Chapter 4 Withdrawal of authorisation

Withdrawal of authorisation.

• (a) if the institution—

• (i) does not engage in the business of providing payment services in accordance with the authorisation within 12 months, expressly renounces the authorisation or ceases to engage in that business for more than six months,

• (ii) obtained the authorisation through false statements or any other irregular means,

• (iii) would constitute a threat to the stability of the payment system by continuing its payment services business, or

• (b) on being satisfied on reasonable grounds that—

• (i) the holder of the authorisation has contravened or is contravening, or has failed or is failing to comply, with a provision of this Part, a condition of the authorisation or a requirement imposed by or under this Part,

• (ii) if the holder of the authorisation is a partnership, the partnership is dissolved by the death or bankruptcy of a partner or because of the operation of the Partnership Act 1890,

• (iii) the winding-up of the holder of the authorisation has commenced,

• (iv) the holder of the authorisation is so structured, or the business of the holder is so organised, that the holder is no longer capable of being regulated to the satisfaction of the Bank,

• (v) the circumstances under which the authorisation was granted have changed to the extent that an application for authorisation would be refused had it been made in the changed circumstances,

• (vi) the holder of the authorisation suspends payments due to creditors, or is unable to meet any other obligations to creditors of the holder,

• (vii) if the holder of the authorisation is a branch or subsidiary of a body corporate that has its head office in another Member State, the authority of that other Member State that performs functions similar to those of the Bank under this Part has terminated the authority of that body to carry on a regulated business in that other country,

• (viii) the holder of the authorisation, or an officer of the holder, is convicted of—

• (I) an offence against this Part or against any other designated enactment or designated statutory instrument, or

• (II) an offence involving fraud, dishonesty, breach of trust, money laundering or financing terrorism,

or

• (ix) that the holder of the authorisation has failed to comply with a condition, requirement or direction imposed under these Regulations and the Bank is of the opinion that the stability and soundness of the holder is or has been materially affected by the failure.

• (2) In paragraph (1)(b)(viii)(I), “designated enactment” and “designated statutory instrument” have the same respective meanings as in the Central Bank Act 1942 (No. 22 of 1942).

• (3) Before withdrawing an authorisation, the Bank shall—

• (a) give written notice of the proposed withdrawal to the institution concerned, setting out a summary of the relevant evidence and the reasons for the proposal and specifying a reasonable period (not less than 21 calendar days) within which the institution may make written representations concerning the proposal, and

• (b) consider any representations made by the institution within the specified period.

• (4) The Bank shall notify the payment institution concerned in writing of the withdrawal of an authorisation, setting out the reasons for the withdrawal.

• (5) The Bank shall give public notice of the withdrawal of an authorisation.

• (6) If the Bank withdraws an authorisation it shall remove from the Register the entries in relation to the payment institution concerned and any agent of it.

• (7) Withdrawal of an authorisation under this Regulation takes effect on and from the date of the notice of withdrawal or, if a later date is specified in the notice, on and from that date, irrespective of whether an appeal against the withdrawal is made under Part VIIA of the Central Bank Act 1942.

Chapter 5 Small Payment Institutions

Small payment institutions — waiver of application of certain provisions of Chapter 2.

• (a) the average amount of payment transactions executed by the person and any agent for which it bears full responsibility during the previous 12 months, or

• (b) the average amount of payment transactions likely to be executed by the person within the next 12 months, assessed on the projected total amount of payment transactions in its business plan,

is not more than €3 million per month.

• (2) The Bank may waive the application to a person of all or part of the procedure and conditions set out in Chapters 2 and 3, and may register the person as a small payment institution, if—

• (a) the person satisfies the Bank that the person qualifies as a small payment institution,

• (b) none of the individuals responsible for the management or operation of the person’s business has been convicted of any offence relating to money laundering or terrorist financing or any other financial crime,

• (c) if the person is a body corporate, it has its head office in the State, and

• (d) if the person is an individual, he or she has his or her place of residence in the State.

• (3) A person registered as a small payment institution under paragraph (2) shall be taken to be a payment institution for the purposes of these Regulations except that—

• (a) its registration as a payment institution is valid only in the State, and

• (b) it is not entitled to provide payment services in any other Member State.

• (4) The Bank may direct that a person registered as a small payment institution may engage only in a specific payment service or a specific activity referred to in subparagraph (a), (b) or (c) of Regulation 27(1).

• (5) A person registered as a small payment institution in accordance with paragraph (2) shall notify the Bank of any change that may affect whether it continues to qualify as a small payment institution.

Requirement to apply for authorisation in certain circumstances.

• (2) If a person referred to in paragraph (1) applies for authorisation in accordance with that paragraph, within the period of 30 calendar days mentioned in that paragraph, it may continue providing payment services until the Bank notifies it of its decision on the application. If such a person fails to apply for authorisation in accordance with that paragraph, it shall cease to provide payment services at the end of that period of 30 calendar days.

Withdrawal of waiver.

• (a) if the undertaking—

• (i) does not begin to engage in the business of providing payment services in accordance with the waiver within 12 months, expressly renounces the waiver or ceases to engage in that business for more than 6 months,

• (ii) obtained the waiver through false statements or any other irregular means,

• (iii) no longer qualifies as a small payment institution, or

• (iv) would constitute a threat to the stability of the payment system by continuing its payment services business, or

• (b) on being satisfied on reasonable grounds that—

• (i) the undertaking has contravened or is contravening, or has failed or is failing to comply with, a provision of this Part, a condition of the authorisation or a requirement imposed by or under this Part,

• (ii) in the case of a partnership, the partnership is dissolved by the death or bankruptcy of a partner or because of the operation of the Partnership Act 1890, or

• (iii) the winding-up of the undertaking has commenced, or

• (iv) the undertaking is so structured, or its business is so organised, that the person is no longer capable of being regulated to the satisfaction of the Bank, or

• (v) the circumstances under which the waiver was granted have changed to the extent that an application for authorisation would be refused had the application been made in the changed circumstances, or

• (vi) the undertaking suspends payments due to creditors, or is unable to meet any other obligations to its creditors, or

• (vii) if the undertaking is a branch or subsidiary of a body corporate that has its head office in another country that is an EEA country, the authority of that other country that performs functions similar to those of the Bank under this Part has terminated the authority of that body to carry on a regulated business in that other country, or

• (viii) the undertaking or an officer of it is convicted of—

• (I) an offence against this Part or against any other designated enactment or designated statutory instrument, or

• (II) an offence involving fraud, dishonesty, breach of trust, money laundering or financing terrorism.

• (ix) the undertaking has failed to comply with a condition, requirement or direction imposed under these Regulations and the Bank is of the opinion that the stability and soundness of the person is or has been materially affected by the failure.

• (2) Before withdrawing a waiver, the Bank shall—

• (a) give written notice of the proposed withdrawal to the person concerned, setting out a summary of the relevant evidence and the reasons for the proposal and specifying a reasonable period (not less than 21 calendar days) within which the person may make written representations concerning the proposal, and

• (b) consider any representations made by the person within the specified period.

• (3) The Bank shall notify the person concerned in writing of the withdrawal of a waiver, setting out the reasons for the withdrawal.

• (4) The Bank shall give public notice of the withdrawal of a waiver.

• (5) If the Bank withdraws a waiver it shall remove from the Register the entries in relation to the person concerned.

• (6) Withdrawal of a waiver under this Regulation takes effect on and from the date of the notice of withdrawal or, if a later date is specified in the notice, on and from that date, irrespective of whether an appeal against the revocation is made under Part VIIA of the Central Bank Act 1942.

Part 3 Payment Systems

Definition (Part 3).

Application of Part II of Central Bank Act 1997 to payment systems.

• (2) For the purposes of that application, a reference in a provision of Part II of the Central Bank Act 1997 to a payment system shall be read as a reference to a payment system within the meaning given by Regulation 38.

• (3) In deciding whether to approve the rules of a payment system, the Bank shall ensure that the rules on access by payment service providers are objective, non-discriminatory and proportionate and do not inhibit access more than is necessary to protect against specific risks such as settlement risk, operational risk and business risk and to protect the financial and operational stability of the payment system.

• (4) A payment system shall not impose on a payment service provider, a payment service user or another payment system—

• (a) any rule restricting effective participation in another payment system,

• (b) any rule that discriminates between payment service providers in relation to their rights, obligations and entitlements, or

• (c) any restriction on the basis of institutional status.

• (5) Paragraphs (1) to (4) do not apply to—

• (a) a payment system that is a relevant system within the meaning given by the European Communities (Settlement Finality) Regulations 2008 (S.I. No. 88 of 2008),

• (b) a payment system composed exclusively of payment service providers belonging to a group composed of entities linked by capital where one of the linked entities has effective control over the other linked entities; or

• (c) a payment system where a sole payment service provider (whether as a single entity or as a group)—

• (i) acts or can act as the payment service provider for both the payer and the payee and is exclusively responsible for the management of the system, and

• (ii) licenses other payment service providers to participate in the system and the latter have no right to negotiate fees between or amongst themselves in relation to the payment system although they may establish their own pricing in relation to payers and payees.

Bank’s powers in relation to payment systems.

• (2) If a payment system operator to which a direction is given under paragraph (1) does not comply with the direction within the period specified in it for that purpose, the Bank may apply to the High Court for an order directing the payment system operator to comply with the direction.

Court’s additional powers in relation to payment systems.

Part 4 Transparency of Conditions and Information Requirements for Payment Services

Chapter 1 General Rules

Scope of this Part.

• (2) This Part applies to a micro enterprise in the same way as to a consumer.

• (3) For the purposes of this Part, an undertaking shall be taken to be a micro enterprise—

• (a) for the purposes of a single payment transaction if it satisfies the definition in Regulation 3 at the time of initiation of the transaction, or

• (b) for the purposes of a framework contract if it satisfies that definition at the time of entering into the framework contract.

Application of this Part.

• (2) This Part applies to payment services denominated in euro or a currency of a Member State outside the euro area.

Operation of other legislative provisions.

• (2) If both this Part and the European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004 (S.I. No. 853 of 2004) apply in relation to a payment transaction or framework contract, the requirements of Regulation 6 of those Regulations (to the extent that that Regulation requires the supply of the information specified in points (a) to (i), (p), (q) and (t) to (w) of Schedule 1 to those Regulations) are superseded by the requirements of—

• (a) in a case to which Chapter 2 applies, Regulations 47 and 48, or